Alberta’s Cardium Formation: Dividend Paying Stocks

Many investors consider dividend paying stocks an important part of their portfolio. In this volatile market, at least they can get away with profits without having to sell. Other investors rely on these dividends for their annual income since they retired. Whatever your reasons for choosing to go with dividend paying stocks are, this post will present a list of dividend paying companies giving you exposure to Alberta’s Cardium oil play.

In 2006 the government of Canada proposed new rules that will end the tax benefits of the income trust structure for most trusts. Energy income trusts will need to convert to a corporate structure by 2011.

There are 2 points you need to remember:

  1. There are risks associated with investing in energy companies and as such the monthly dividend is not guaranteed.
  2. Following the 2011 deadline, many trusts lowered their monthly distribution upon conversion to corporations.

In summary, these companies are no dividend aristocrats; they are mostly ex-income trusts with distributions that have been cut following the credit crunch in 2009 or cut following conversion to a dividend paying corporation.

Let’s start with the list of dividend paying corporations.

Corporations Symbol & Price Dividend 2012E Yield Market Cap
Penn West Petroleum PWT.TO 14.21 [-0.13] $1.08 4.10% 11.99B
ARC Resources ARX.TO 21.18 [-0.22] $1.20 4.90% 6.76B
Enerplus ERF.TO 14.04 [-0.32] $2.16 6.80% 5.72B
Bonavista Energy BNP.TO 19.00 [+0.27] $1.44 5.00% 4.48B
Pengrowth Energy PGF.TO 7.59 [-0.03] $0.84 6.70% 4.07B
Vermilion Energy VET.TO 43.14 [-0.45] $2.28 4.90% 4.17B
PetroBakken Energy PBN.TO 12.09 [+0.34] $0.96 4.6% 3.90B
Peyto E&D PEY.TO 18.15 [+0.09] $0.72 3.80% 2.29B
Daylight Energy DAY.TO 10.07 [0.00] $0.60 6.20% 1.98B
NAL Energy NAE.TO 6.50 [-0.09] $0.84 6.50% 1.86B
Bonterra Energy BNE.TO 48.00 [0.00] $2.88 5.40% 1.00B

Besides the Cardium land base each company holds, you might want to take into account the tax pools each company carries because it will shield their income for several years in some cases.

I would also ask you to push your research on the company further by checking where else it would give you exposure in terms of emerging plays. For example, PetroBakken carries significant land in the Bakken, the Cardium and a number of acres in the emerging Horn River Basin unconventional gas play. A long term holder might find these variables quiet appealing.

Finally, if you find any errors in the data or if I missed any companies out there that qualify on the list please do not hesitate to inform me by commenting or contacting me.